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It's now January 2012, high canadian consumer debt load is in all the news media, your New Years resolution might have been to work on reducing your debt, so here's a great way of looking at it. Fixed mortgage rates are at historical lows…a 5 year fixed rate can be had for 3.39% and in some cases, even 3.29%. Does it make sense to refinance your mortgage and consolidate that car loan, student loan, credit card, line of credit or other debt? The answer is an overwhelming YES!

Compounding interest rates are a killer. If you have $20,000 or more in non-mortgaged debt, then you should consider consolidation. Especially with today's record low interest rates.

Here's an example of one situation:

Rate

Balance

Pymnt

Mortgage

3.99%

$300,000

$1,349

Car loan

6.00%

$24,000

$563

Credit Cards

18%

$10,000

$300

Line of credit

7%

$10,000

$300

mortgage penalty

$2,993

$0

Totals

$346,993

$2,512

And here's what the new situation could look like after consolidating their debts:

Rate

Balance

Pymnt

Mortgage

3.39%

$346,993

$1,533

Car loan

$0

$0

Credit Cards

$0

$0

Line of credit

$0

$0

mortgage penalty

$0

$0

Totals

$346,993

$1,533

So in this example, we are reducing the monthly payment by $979.00. Let's take some of that money and put it towards your new mortgage… if you took $500/mth and put this towards your mortgage for 5 years, you would reduce your amortization to 10 years and 7 months. Clearly, this is worth breaking the mortgage and paying the penalty.

(keep in mind, the penalty could be higher if the lender uses an Interest Rate Differential to calculate the penalty… Always speak with your Mortgage Broker or feel free to contact myself);

Century 21 Canada Limited Partnership currently has franchise opportunities available in select markets across Canada. The intent of this communication is for informational purposes only and is not intended to be a solicitation to anyone under contract with another real estate brokerage organization. CENTURY 21® is a registered trademark owned by Century 21 Real Estate LLC, used under license. ® Trademarks of AIR MILES International Trading B.V. Used under license by LoyaltyOne, Inc. and Century 21 Canada Limited Partnership.

Certain listing content on this website has been provided by The Canadian Real Estate Association. The compilation of such Listing Content is owned by The Canadian Real Estate Association and/or its member Boards and Associations and licensed to Century 21 Canada Limited Partnership.